UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

## FORM 10-K

|Mark One |                                                                                               
|-------- | ----------------------------------------------------------------------------------------------
|[ X ]    | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934    
|         | For the Fiscal Year ended December 31, 2011                                                   
|[   ]    | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
|         | For the transition period from _____ to
  _____                                               

Date of Report:April 16, 2012

### BALTIA AIR LINES, INC.

(Exact name of Registrant as specified in its charter)

|NEW YORK(State of Incorporation)                                                                                                                                                                                                                                                                                                                                   | 11-2989648(IRS Employer Identification No.)          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------
|JFK International Airport, Building 151, Jamaica, NY
11430(Address of principal executive offices)(718) 244 8880
(Registrant's telephone number, including area code)                                                                                                                                                                                             
|Title of each class
-None-                                                                                                                                                                                                                                                                                                                                         | Name of each Exchange on which registered
-None-     
|Securities Registered pursuant to Section 12(g) of the Exchange Act:                                                                                                                                                                                                                                                                                              
|Common Stock,(Title of Class)                                                                                                                                                                                                                                                                                                                                      | $.0001 Par Value                                     
|Indicate by check mark if the
Registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes [  ] - - No [X]                                                                                                                                                                                                                       
|Indicate by check mark if the Registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. Yes [   ] - - No [X]                                                                                                                                                                                                                         
|Indicate by check mark whether the Registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] - - No [  ]
|Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes [X] - - No [  ]     
|Indicate by check mark whether the Registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer or a smaller reporting company.
See definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):                                                       
|Large accelerated filer [   ] 
Non-accelerated filer [   ]                                                                                                                                                                                                                                                                                                         | Accelerated filer [  ]
Smaller reporting company  [X]
|Indicate by check mark whether the Registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act of 1934).  Yes [ ]   No [X]                                                                                                                                                                                                                        
|The aggregate market value of the voting common equity held by non-affiliates
as of April 10, 2012 is $31,233,039.                                                                                                                                                                                                                                                
|The number of shares of the registrant's common stock outstanding as of April
10, 2012 was 1,909,599,529.                                                                                                                                                                                                                                                         

---

### TABLE OF CONTENTS

|PART 1   |                                                                                                             
|-------- | ------------------------------------------------------------------------------------------------------------
|Item 1.  | Business                                                                                                    
|Item 1A. | Risk Factors                                                                                                
|Item 1B. | Unresolved Staff Comments                                                                                   
|Item 2.  | Properties                                                                                                  
|Item 3.  | Legal Proceedings                                                                                           
|PART II  |                                                                                                             
|Item 5.  | Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|Item 6.  | Selected Financial Information                                                                              
|Item 7.  | Management's Discussion and Analysis of Financial Condition and
Results of Operations                       
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                  
|Item 8.  | Financial Statement Supplementary Data                                                                      
|Item 9.  | Changes in and Disagreements with Accountants on Accounting And
Financial Disclosures                       
|Item 9A  | Controls and Procedures                                                                                     
|Item 9B  | Other Information                                                                                           
|PART III |                                                                                                             
|Item 10. | Directors and Executive Officers of the Registrant                                                          
|Item 11. | Executive Compensation                                                                                      
|Item 12. | Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters              
|Item 13. | Certain Relationships and Related Transactions                                                              
|Item 14. | Principal Accountant Fees and Services                                                                      
|PART IV  |                                                                                                             
|Item 15. | Financial Statements and Other Exhibits                                                                     

---

#### PART I

##### Item 1. Business.

Baltia Air Lines, Inc. (the "Company" or "Baltia" or "Baltia Air Lines") is a Part 121 (heavy jet
operator) start-up United States airline with Government fitness approval and is currently
conducting the FAA Air Carrier Certification. Upon completion of the Air Carrier Certification,
Baltia will commence scheduled non-stop service from its Base of Operations at Terminal 4, JFK
Int'l Airport in New York to Pulkovo II Int'l Airport of St. Petersburg.Baltia Air Lines, Inc. was
organized in the State of New York on August 24, 1989.

On December 19, 2008, the U.S. Department of Transportation (DOT) issued its Order to Show
Cause, finding that Baltia Air Lines is fit, willing and able to engage in international air transport
of persons, property and mail.  Baltia was awarded the non-stop route from JFK International
Airport, New York, New York to Pulkovo International Airport, St. Petersburg Russia. Baltia
was also authorized for worldwide charter services. Baltia had filed its application with the DOT
in October 2007.

On March 20, 2009 the DOT awarded Baltia Air Lines its initial frequencies for flights from JFK
to St. Petersburg.

On August 18, 2009, the Company purchased its first Boeing 747 aircraft from Logistic Air, Inc.

In the first quarter of 2010, we leased engines on a power by the hour basis from Logistic Air,
Inc. The engines have been delivered and installed on the aircraft.

In the last quarter of 2010, we purchased our second Boeing 747 aircraft from Kalitta Air.

Baltia currently carries $500,000,000 aircraft liability insurance, and has placed $1.2 billion
airline liability insurance through JLT Aerospace meeting the regulatory requirement in
preparation for the commencement of revenue service. The Company will carry airline liability
insurance as required for a US airline by DOT regulation.

Following the commencement of service on the JFK-St. Petersburg route, Baltia's objective is to
develop its route network to Russia, Latvia, Ukraine, and Belarus.

Baltia intends to provide full service, i.e. passenger, cargo and mail. Baltia has two registered
trademarks "BALTIA" and "VOYAGER CLASS" and five trademarks are subject to registration.

There is currently no non-stop service from JFK to St. Petersburg. Connecting service is
provided mainly by foreign carriers. Finnair, Lufthansa and SAS are the leading competitors in
the US-Russia market. KLM, British Airways, Air France, Austrian Airlines, and Swiss
International also provide service. However, foreign carriers are required to have intermediate
stops at transit airports in their respective countries (Helsinki, Frankfurt, Stockholm,
Copenhagen, etc.) because they are "third nation" airlines and as such cannot fly directly between
the US and Russia (only a US airline as well as a reciprocating Russian airline is eligible to fly
nonstop). Delta and two Russian airlines, Aeroflot and Transaero, currently operate between JFK
and Moscow. With the exception of the JFK-Moscow route, there exists no non- stop
competitive air transportation service on the routes for which Baltia intends to apply.

Baltia's objective is to establish itself as the leading non-stop carrier in the market niche over the
North Atlantic with operations with profitable growth over time. In order to accomplish this
objective, we intend to establish and maintain high quality service standards which we believe
will be competitive with the European airlines currently providing connecting flights.  Baltia
does not expect to be in direct competition with deep discount airlines, including several East
European airlines and the offspring of the former Soviet airline Aeroflot, which provide
connecting flights.

Baltia intends to provide First, Business, and Voyager Class accommodations.  Baltia's passenger
market strategy is tailored to particular preferences of the various segments of its customer base,
with marketing attention particularly focused on American business travelers with interests in
Russia who require high quality, non-stop service from the US to Russia.

Baltia's initial marketing strategy is based on existing agencies specializing in the market,
selected travel and business publications, supplemented by direct mailings to corporate travel
planners, and individual American businesses that are currently involved in Russia. Soon after
the inauguration of flight service, Baltia plans to implement its frequent flyer program. As the
marketing matures, Baltia plans to advertise to the general public throughout the US, and in
Russia.  Baltia also plans to sponsor selected industry and trade events in the US and in St.
Petersburg.

Baltia intends to provide customer service and reservations centers in New York and in St.
Petersburg, to list Baltia's schedules and tariffs in the Official Airline Guide, and provide
world-wide access to reservations on Baltia's flights through a major Computer Reservations and
Ticketing System ("CRS").

The Company intends to activate its reservations service when the DOT issues its order
authorizing Baltia to sell tickets (expected to be approximately 30 to 45 days before the inaugural
flight).

Baltia has identified the following market segments in the U.S.-Russia market: (i) Business
Travelers, (ii) General Tourism, (iii) Ethnic Travelers, (iv) Special Interest Groups, (v)
Professional Exchanges, and (vi) Government and Diplomatic Travel.

Baltia believes that the direct non-stop service to be offered by it will be superior to the stop-over
service currently offered by foreign airlines.   A comparison between the two services with
respect to passenger convenience and cargo transport efficiency is set forth below.

BALTIA - US flag, non-stop service:

With non-stop service, a passenger can fly from JFK to St. Petersburg in about 8 hours in a
Boeing B747 wide body airplane. Cargo arrives containerized, palletized, and secure.

Foreign, stop-over journeys:

With stop-over service, it would take a passenger 10 to 18 hours to fly through Helsinki,
Copenhagen, Moscow, or Frankfurt on a foreign carrier. In addition, passengers must change to
narrow-body aircraft at a layover airport. Cargo is "broken up" and manually loaded onto
narrow-body aircraft, or trucked from Helsinki.

Because of the increased reliability and comfort of a non-stop flight, Baltia expects to capture a
portion of the existing traffic.

With the Boeing 747 wide-body aircraft Baltia intends to provide cargo service from JFK to St.
Petersburg, offering containers, pallets, and block space arrangements. Baltia expects to carry
contract cargo for express shippers.  Baltia also plans to market its own "Baltia Courier", "Baltia
Express", and "Baltia Priority" express service for letters and packages.  Baltia also expects
revenues from diplomatic mail and cargo, under the Fly America Act.

Baltia has passenger service and ground service arrangements at JFK and at Pulkovo II Airport in
St. Petersburg. As a US carrier flying into a foreign country, Baltia will be eligible to the same
degree of priority that a foreign carrier receives when arriving in the US.

Baltia intends to start the JFK-St. Petersburg service with one round- trip flight per week, then
increase the frequency to three round trips, and then to five round trips.

Baltia plans to build operating modules and apply them in developing new markets. Once
established, Baltia plans to duplicate its JFK-St. Petersburg standards on flights on other
transatlantic routes.

Additional revenues from charter flying. Concurrently with with its Part 121 air carrier
certification ("Part 121") for scheduled service, Baltia is certifying for world wide charter
service. Baltia plans to utilize aircraft time available between scheduled service, to earn
additional revenues from charters. We may also qualify our aircraft for military contracts.

As of December 31, 2011, Baltia's staff of twenty-five includes professionals who have extensive
major US airline experience in aircraft maintenance, airline operations, airline regulatory
compliance, reservation, info technology, passenger service, and administration.

##### Item 1A.  Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of
1934 and are not required to provide the information under this item.

##### Item 1B.  Unresolved Staff Comments.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of
1934 and are not required to provide the information under this item.

##### Item 2.  Properties.

The Company rents space at Concourse A, Terminal 4, JFK International Airport and has
headquarters at Building 151.

##### Item 3. Legal Proceedings.

None.

##### Item 4. Reserved

#### PART II.

##### Item 5.  Market for Registrant's Common Equity, Related Stockholder

         Matters and Issuer Purchases of Equity Securities.

The following table sets forth the high and low sales prices, as quoted by the OTCBB, for our
common stock for each quarter during our two most recent fiscal years ended December 31, 2009
and 2010. These quotations reflect inter-dealers prices, without retail mark-ups, mark-downs or
commissions, and may not represent actual transactions.

|Fiscal Quarter Ended        | High            | Low             
|--------------------------- | --------------- | ----------------
|--------------------------- | --------------- | ----------------
|March 31, 2010              | .09             | .08             
|June 30, 2010               | .08             | .04             
|September 30, 2010          | .08             | .04             
|December 31, 2010           | .05             | .04             
|March 31, 2011              | .04             | .04             
|June 30, 2011               | .04             | .04             
|September 30, 2011          | .05             | .04             
|December 31, 2011           | .05             | .04             

The Company currently estimates that there are more than 800 holders of record of its common
stock. Given its continuing need to retain any earnings to fund its future operations and desired
growth, the Company has not declared or paid, nor does it currently anticipate declaring or
paying for the foreseeable future, any dividends on the Company's common stock.

The Company currently has no equity compensation plans, no written purchase, savings, option,
bonus, appreciation, profit sharing, thrift, incentive, pension or similar plan or written
compensation contracts.

##### Item 6.  Selected Financial Information.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of
1934 and are not required to provide the information under this item.

##### Item 7.  Management's Discussion and Analysis of Financial Condition and Results of
Operations.

The following discussion includes certain forward-looking statements within the meaning of the
safe harbor protections of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Statements that include words such as
"believe," "expect," "should," intend," "may," "anticipate," "likely," "contingent," "could," "may,"
or other future-oriented statements, are forward-looking statements. Such forward-looking
statements include, but are not limited to, statements regarding our business plans, strategies and
objectives, and, in particular, statements referring to our expectations regarding our ability to
continue as a going concern, generate increased market awareness of, and demand for, our
service, realize profitability and positive cash flow, and timely obtain required financing. These
forward-looking statements involve risks and uncertainties that could cause actual results to
differ from anticipated results. The forward-looking statements are based on our current
expectations and what we believe are reasonable assumptions given our knowledge of the
markets; however, our actual performance, results and achievements could differ materially from
those expressed in, or implied by, these forward-looking statements.

Our fiscal year ends on December 31. References to a fiscal year refer to the calendar year in
which such fiscal year ends.

OVERVIEW

The Company was organized in the State of New York on August 24, 1989. Its objective is to
provide scheduled air transportation from the U.S. to Russia, and former Soviet Union countries.

Baltia is currently conducting the FAA Air Carrier Certification process.  Upon completion of the
Air Carrier Certification, Baltia intends to commence scheduled non-stop service from its Base
of Operations at Terminal 4, JFK Int'l Airport in New York to Pulkovo II Int'l Airport of St.
Petersburg.

Baltia intends to provide full service, i.e. passenger, cargo and mail, and will not be dependent
upon one or a few major customers. Baltia has two registered trademarks "BALTIA" and
"VOYAGER CLASS" and five trademarks subject to registration.

The accompanying consolidated financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business.  The Company has capital which  management believes is sufficient to start
revenue operations on the JFK-St. Petersburg route.  The Company's operational success may be
dependent upon its timely procuring significant external debt and/or equity financing to fund its
immediate and nearer-term operations, and subsequently realizing operating cash flows from
ticket sales sufficient to sustain its longer-term operations and growth initiatives.

PLAN OF OPERATION

We believe that we have sufficient capital to commence revenue flight operations. During 2011
and into 2012 we continued to finance our operations through the issuance of our common stock.
Until revenue operations begin, our monthly expenditures for administrative and regulatory
compliance can be controlled at about $100,000-$200,000. Based on current reserves we believe
we have sufficient capital to support our development stage operations through the end of 2011.

In 2012 we plan to raise $5 to $8 million in additional financing in order to support revenue
flight operations. Based on our prior experience with certification and current preparations
management believes that the launch budget, previously reviewed by the DOT, will be adequate
to complete certification and to commence flight service. Approximately $1,500,000 is budgeted
for certification tasks, and $500,000 for general and administrative expenses. At the time flight
service is inaugurated the Company plans to have approximately 20 management and 45 staff
personnel.

There can be no assurance that additional financing will be available on terms favorable to us or
at all. If adequate funds are not available or are not available on acceptable terms, we may not be
able to fund operations.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon
our financial statements, which have been prepared in accordance with accounting principles
generally accepted in the U.S. The preparation of our financial statements requires us to make
certain estimates, judgments and assumptions that affect the reported amounts of assets and
liabilities at the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Our estimates, judgments and assumptions
are continually re-evaluated based upon available information and experience. Because of the use
of estimates inherent in the financial reporting process, actual results could differ from those
estimates. Areas in which significant judgment and estimates are used include, but are not limited
to, valuation of long-lived assets and deferred income taxes.

Valuation of Long-Lived Assets: We review the recoverability of our long- lived assets,
including buildings, equipment and intangible assets, when events or changes in circumstances
occur that indicate that the carrying value of the asset may not be recoverable. The assessment of
possible impairment is based on our ability to recover the carrying value of the asset from the
expected future pre-tax cash flows (undiscounted and without interest charges) of the related
operations. If these cash flows are less than the carrying value of such asset, an impairment loss
is recognized for the difference between estimated fair value and carrying value. Our primary
measure of fair value is based on discounted cash flows. The measurement of impairment
requires management to make estimates of these cash flows related to long-lived assets, as well
as other fair value determinations.

We amortize the costs of other intangibles (excluding goodwill) over their estimated useful lives
unless such lives are deemed indefinite. Amortizable intangible assets are tested for impairment
based on undiscounted cash flows and, if impaired, written down to fair value based on either
discounted cash flows or appraised values.  Intangible assets with indefinite lives are tested for
impairment, at least annually, and written down to fair value as required.

The Company complies with FASB ASC Topic 718 "Compensation - Stock Compensation,"
which establishes standards for the accounting for transactions in which an entity exchanges its
equity instruments for goods or services.  It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the fair value of the entity's equity
instruments or that may be settled by the issuance of those equity instruments. FASB ASC Topic
718 focuses primarily on accounting for transactions in which an entity obtains employee
services in share-based payment transactions.  FASB ASC Topic 718 requires an entity to
measure the cost of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award (with limited exceptions).  That cost will be
recognized over the period during which an employee is required to provide service in exchange
for the award the requisite service period (usually the vesting period).  No compensation costs are
recognized for equity instruments for which employees do not render the requisite service.  The
grant-date fair value of employee share options and similar instruments will be estimated using
option-pricing models adjusted for the unique characteristics of those instruments (unless
observable market prices for the same or similar instruments are available).  If an equity award is
modified after the grant date, incremental compensation cost will be recognized in an amount
equal to the excess of the fair value of the modified award over the fair value of the original
award immediately before the modification.

Our primary type of share-based compensation consists of stock-based awards.  We use the fair
value method in accordance with ASC 718. We also may use stock options.  We use the
Black-Scholes option pricing model in valuing options. The inputs for the valuation analysis of
the options include the market value of the Company's common stock, the estimated volatility of
the Company's common stock, the exercise price of the warrants and the risk free interest rate.

|Year | Interest Rate | Dividend  Yield | ExpectedVolatility | Expected Life in Years
|---- | ------------- | --------------- | ------------------ | ----------------------
|2010 | 4.4%          | 0.00%           | 200%               | 1                     
|2011 | 3.0%          | 0.00%           | 200%               | 5                     

Income taxes: The Company accounts for income taxes in accordance with FASB ASC Topic
740 "Income Taxes," which requires accounting for deferred income taxes under the asset and
liability method.  Deferred income tax asset and liabilities are computed for difference between
the financial statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on the enacted tax laws and rates applicable to the periods
in which the differences are expected to affect taxable income.  Valuation allowances are
established, when necessary, to reduce the deferred income tax assets to the amount expected to
be realized.

The determination of the Company's provision for income taxes requires significant judgment,
the use of estimates, and the interpretation and application of complex tax laws.  Significant
judgment is required in assessing the timing and amounts of deductible and taxable items and the
probability of sustaining uncertain tax positions.  The benefits of uncertain tax positions are
recorded in the Company's financial statements only after determining a more-likely-than-not
probability that the uncertain tax positions will withstand challenge, if any, from tax authorities.
When facts and circumstances change, the Company reassesses these probabilities and records
any changes in the financial statements as appropriate.

In accordance with GAAP, the Company is required to determine whether a tax position of the
Company is more likely than not to be sustained upon examination by the applicable taxing
authority, including resolution of any related appeals or litigation processes, based on the
technical merits of the position.  The tax benefit to be recognized is measured as the largest
amount of benefit that is greater than fifty percent likely of being realized upon ultimate
settlement.  De-recognition of a tax benefit previously recognized could result in the Company
recording a tax liability that would reduce stockholders equity.  This policy also provides
guidance on thresholds, measurement, de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition that is intended to provide better
financial statement comparability among different entities.  Management's conclusions regarding
this policy may be subject to review and adjustment at a later date based on factors including, but
not limited to, on-going analyses of and changes to tax laws, regulations and interpretations
thereof. Generally, the tax filings are no longer subject to income tax examinations by major
taxing authorities for years before 2007. Any potential examinations may include questioning the
timing and amount of deductions, the nexus of income among various tax jurisdictions and
compliance with U.S. federal, state and local tax laws.  The Company's management does not
expect that the total amount of unrecognized tax benefits will materially change over the next
twelve months.

RESULTS OF OPERATIONS

We had no revenues during the fiscal years ended December 31, 2011 and 2010, because (1) we
did not fly aircraft in passenger, charter, or freight service, and (2) we could not sell tickets for
those services.

Our general and administrative expenses increased by $5,762,390 to $24,323,228 during fiscal
year ended December 31, 2011 as compared to an increase of $7,157,352 during the fiscal year
ended December 31,2010. This decrease is primarily attributable to the costs incurred in
connection with air carrier certification.

Primarily as a result of air carrier certification, we incurred a net loss of $25,075,497 during the
fiscal year ended December 31, 2011 as compared to a net loss of $19,394,527 during the fiscal
year ended December 31, 2010.

Our future ability to achieve profitability in any given future fiscal period remains highly
contingent upon us beginning flight operations. Our ability to realize revenue from flight
operations in any given future fiscal period remains highly contingent upon us obtaining
significant equity infusions and/or long-term debt financing sufficient to fund initial operations.
Even if we were to be successful in procuring such funding, there can be no assurance that we
will be successful in commencing revenue operations or, if commenced, that such operations
would be profitable.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have incurred substantial operating and net losses, as well as negative
operating cash flows. As of December 31, 2011, we had cash of $57,390, an increase of $4,550
from the cash balance of $52,840 reported at December 31,2010. Our stockholders' equity was
$2,457,590 at December 31, 2011, an increase of $170,637 from the balance of $2,286,953
reported at December 31, 2010.

Our operating activities utilized $7,223,181 in cash during the fiscal year ended December 31,
2011, an increase of $2,814,817 from the $4,408,364 in cash utilized during the fiscal year ended
December 31, 2010.

Our financing activities provided $7,807,242 and $5,527,454 in cash during the fiscal year ended
December 31, 2011 and 2010, respectively.

We had no significant planned capital expenditures, budgeted or otherwise, as of December 31,
2011, except for an investment of approximately $400,000 in our aircraft enhancements and
approximately $100,000 in office equipment this year.

Off-Balance Sheet Arrangements: We do not have any off-balance sheet arrangements which
have, or are reasonably likely to have, an effect on our financial condition, financial statements,
revenues or expenses.

##### Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of
1934 and are not required to provide the information under this item.

##### Item 8.  Financial Statement Supplementary Data.

None.

##### Item 9.  Changes in and Disagreements with Accountants on Accounting         And Financial Disclosures

None

##### Item 9A(T). Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.  As of the end of the period covered by this
report, we conducted an evaluation under the supervision and with the participation of our chief
executive officer and chief financial officer of our disclosure controls and procedures (as defined
in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our
chief executive officer and chief financial officer concluded that our disclosure controls and
procedures are effective to ensure that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission's rules and forms.

Management's Annual Report on Internal Control over Financial Reporting. Our management is
responsible for establishing and maintaining adequate internal control over financial reporting (as
defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes of accounting
principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Therefore, even those systems determined to be effective can provide only
reasonable assurance of achieving their control objectives.

Our management evaluated the effectiveness of our internal control over financial reporting as of
December 31, 2011. In making this assessment, our management used the COSO framework, an
integrated framework for the evaluation of internal controls issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our
management concluded that, as of December 31, 2011, our internal control over financial
reporting was effective.

This annual report does not include an attestation report of our registered public accounting firm
regarding internal control over financial reporting. Management's report was not subject to
attestation by our registered public accounting firm pursuant to temporary rules of the SEC that
permit the company to provide only management's report in this annual report.

Changes in Internal Control Over Financial Reporting.   There was no change in our internal
controls or in other factors that could affect these controls during our last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting. While existing controls may be adequate at present, upon the commencement of flight
revenue service we intend to implement controls appropriate for airline operations.

##### Item 9B.  Other Information.

None.

#### PART III

##### Item 10.  Directors and Executive Officers of the Registrant.

The following table summarizes certain information with respect to the executive officers and
directors of the board :

|Name              | Age | Position                                   | 
|----------------- | --- | ------------------------------------------ | 
|Igor Dmitrowsky   | 56  | President, CEO, CFO, Chairman of the Board
|Russell Thal      | 77  | Executive Vice President                  
|Barry Clare       | 53  | Vice President Finance                    
|Walter Kaplinsky  | 74  | Secretary, Director                       
|Andris Rukmanis   | 50  | Vice President Europe, Director           
|Vick Luis Bolanos | 52  | Director                                  

Our directors serve until the next annual meeting and until their successors are elected and
qualified. Our officers are appointed to serve for one year until the meeting of the board of
directors following the annual meeting of stockholders and until their successors have been
elected and qualified. There are no family relationships between any of our directors or officers.

A.  Board of Directors:

Igor Dmitrowsky

Igor Dmitrowsky, Chairman and President, Chief Executive Officer and CFO, founded
the Company in August 24, 1989.  Guiding, directing and maintaining daily operations of the
Company has been his full time occupation and executive profession throughout the years.  Prior
to founding Baltia Air Lines, Inc., in 1979, Mr. Dmitrowsky immigrated from Latvia, learned the
English language, attended US university in engineering and business, founded American Kefir
Corporation, a dairy distribution company, which completed a public offering in 1986 and from
which he retired in 1987 and became a U.S. Citizen.  As a hobby he designed and began
construction of a personal flying machine, became a pilot and pursued an interest in securities.

As of December 2011, Mr. Dmitrowsky had the language, culture and social skills
necessary to structure a business involving both the United States and Russia.  His  engineering
and business education as well as the above stated experience enables him to manage the various
aspects of an international airline.

No organization to which Mr. Dmitrowsky has been associated is a parent, subsidiary or
other affiliate of Baltia Air Lines.

Walter Kaplinsky

Walter Kaplinsky, Director and Corporate Secretary since 1993, has been a retired
engineer for the past six years, contributing his time to the Company.  Together with Mr.
Dmitrowsky, Mr. Kaplinsky was a co-founder of American Kefir Corporation, where he served
full-time professionally as Secretary and Vice President. As an emigre from Russia, he has
substantial knowledge of the culture which will be the primary destination of the Company.

As of December 2011, Mr. Kaplinsky has knowledge of the Company business operations
and efforts, collaborating in the development of the Company business plan since inception,
through its earlier efforts to commence operations and to date.  In exercising the functions of a
corporate Secretary, he served the Company diligently over many years, and provides
institutional memory and experience with the problems and powers of the corporate structure.

No organization to which Mr. Kaplinsky has been associated is a parent, subsidiary or
other affiliate of Baltia Air Lines, Inc..

Andris Rukmanis

Andris Rukmanis, Director and Vice President Europe, is and has been for more than
twenty years a full-time qualified licensed attorney in Latvia, specializing in business law, and
has been a Director of the Company since 1990.  From 1988 through 1989, he was Senior Legal
Counsel for the Town of Adazhi in Riga County, Latvia.  From 1989 to 1990, he served as
Deputy Mayor of Adazhi.

As of December 2011, Mr. Rukmanis had the political experience, legal education, and
language as well as cultural skills that were needed by the Company in light of the Baltia's initial
market in European foreign Soviet controlled countries.

No organization to which Mr. Rukmanis has been associated is a parent, subsidiary or
other affiliate of Baltia Air Lines, Inc..

Vick Luis Bolanos

Vick Luis Bolanos, has served as Director since 2009.  Mr. Bolanos is, and has been since
1992,  full-time President of Eastern Construction & Electric, Inc.  Since May 2005, Eastern has
been the Simplified Acquisition Base Engineering Requirements (SABER) contractor.  The
USAF uses the SABER contractor to fulfill engineering requirements on a variety of projects,
ranging from small renovations to large scale infrastructure needs involving pipelines, electrical
substations, and life safety issues.  Eastern is also working on McGuire AFB for the Corps of
Engineers under a Basic Agreement to both design and build or install several projects and is
currently working for the Air Force at Willow Grove Air Station and a Task Order Contract at
Fort Monmouth, New Jersey.

As of December 2011, Mr. Bolanos had the specific experience of developing a company
from the start as 8a.  He understands managing large projects to produce growth and profit.  He is
familiar with working with government agencies and has specific experience working projects in
the aviation field.  These skills are critical to the Company in light of Baltia's being a start-up
company in aviation with the need to initiate and bring to fruition many projects to enable the
Company to grow profitably.

No organization to which Mr. Rukmanis has been associated is a parent, subsidiary or
other affiliate of Baltia Air Lines, Inc..

B.   Executive Officers In Addition to Mr. Dmitrowsky and Mr. Rukmanis:

Russell Thal

Russell Thal, Executive Vice President, joined the Company in year 2000 and his full
time occupation has been as Executive Vice President of the Company where he has maintained
his executive profession.  In 1958, he left the US Army and entered the civilian human relations
field.  In 1964, he joined Ceabord World Airlines as Personnel Manager. Soon was moved to
Director of Crew Scheduling and Dispatch and finished as interface with Military Airlift
Command for Ceabord.  From 1980 to 1981 he was Director of Stations with responsibility for
hiring and outfitting all stations for the start-up New York Air.  In 1981, Mr. Thal started
Compuflight, Inc., and served as President and Chairman until he retired in 2001.  Compuflight
provided both flight planning and engineering services to the airline industry.

As of December 2011, Mr. Thal had the specific experience in airline operations and
management to assist Baltia President Igor Dmitrowsky.  He functions as head of human
resources, purchasing and provide all management services required by the Company.  Mr. Thal's
experience and skills is particularly needed as Baltia is starting up.  A limited number of people
are required with skills in many fields.

No organization to which Mr. Thal has been associated is a parent, subsidiary or other
affiliate of Baltia Air Lines, Inc.

Barry Clare

Barry Clare, Vice President of Finance joined the Company in 2006 and it has been his
full-time occupation and profession for the past five years.  From 2004 to 2006 Mr. Clare owned
his own business as a full-time and profession investment banker. From 2001 to 2004 Mr. Clare
had been Chief Operating Officer for Advance Plant Pharmaceuticals, Inc.  From 1995 to 1996,
Mr. Clare served as Vice President of Intermediaries, Inc., an investment banking firm.

As of December 2011, Mr. Clare had the specific experience in raising capital that has
been absolutely critical to the Company's being able to purchase aircraft, hire specialized experts
for pursuing certifications, to enlarge the staff and physical workplace, create and maintain a
station in St. Petersburg, Russia, and support the extensive travel required to prepare for
commencing international scheduled flights.  All this has been maintained financially over the
past five years with zero operating revenue.

No organization to which Mr. Clare has been associated is a parent, subsidiary or other
affiliate of Baltia Air Lines, Inc.



C.  Nominations for Director:

Baltia Air Lines, Inc., has had only one recent nomination for director, Vick Luis
Bolanos, who was nominated and chosen as a director in 2009 because Baltia sought someone
with the skills stated above.   The Baltia has four Board members.  Each has direct access to
others and "hands on" opportunities to advance the Company.  Mr. Bolanos was unanimously
selected to replace the retiring Board member because he brought insight, experience, and skills
that had enabled him to bring Eastern Construction & Electric, Inc. from inception to a large
company operating in several geographic locations.  Similar to the operations which Mr. Bolanos
has been a part of, Baltia is a start-up with plans to become a large company with stations in
Russia and in several former Soviet controlled countries.

##### Item 11.  Executive Compensation.

No cash compensation has been paid to our executive officers during the fiscal years ended
December 31, 2010 and 2011, except $51,000 was paid to the Executive Vice President in 2011.

During the fiscal year ended December 31, 2011, no executive options were granted.

During the fiscal year ended December 31, 2011, no executive stock options were exercised.

In 2011, the Company issued 159,840,816 shares of common stock to executive officers, the
shares recorded at fair value, awarded as bonus fully earned and non-assessable, and containing
no future earned performance or forfeiture requirements. Of this, 148,500,000 of the shares,
valued at $7.2 million, were issued to the Company's President and CEO, Igor Dmitrowsky.

In 2010, the Company issued 191,000,000 shares of common stock to executive officers, the
shares recorded at fair value, awarded as bonus fully earned and non-assessable, and containing
no future earned performance or forfeiture requirements.  Of this, 149,000,000 shared, valued at
$8,800,000 was issued to the Company's President and CEO, Igor Dmitrowsky.

In 2009, the Company issued 150,000,000 shares of common stock to executive officers, the
shares recorded at fair value, awarded as bonus fully earned and non-assessable, and containing
no future earned performance or forfeiture requirements.  Of this, 116,000,000 shares, valued at
$5,308,000 was issued to the Company's President and CEO, Igor Dmitrowsky.

**SUMMARY COMPENSATION TABLE**

|Name & Principal 
Position          | Year       | Base Salary | Bonus      | Stock Awards*            | Option Awards* | Non-Equity  Incentive Plan Compensation  Earnings | Change in Pension Value and Nonqualified Incentive Plan Compensation | All Other Compensation | Total                
|----------------------------------- | ---------- | ----------- | ---------- | ------------------------ | -------------- | ------------------------------------------------- | -------------------------------------------------------------------- | ---------------------- | ---------------------
|Igor Dmitrowsky President, CEO      | 2011  2010 | $ 0     0   | $ 0   0    | $ 8,800,000    7,200,000 | $ 0   0        | $ 0      0                                        | $ 0      0                                                           | $ 0     0              | $8,800,000  7,200,000
|Barry Clare      Vice-President     | 2011  2010 | 0    0      | 0     0    | 112,700    1,782,230     | 0           0  | 0             0                                   | 0           0                                                        | 0  0                   | 112,700 1,782,230    
|Rusell Thal          Vice-President | 2011  2010 | 51,000    0 | 0        0 | 392,000    718,833       | 0     0        | 0       0                                         | 0     0                                                              | 0      0               | 443,000  718,833     

* These columns represent the grant date fair value of the awards as calculated in
accordance with FASB ASC 718 (Stock Compensation).  Pursuant to SEC rule changes effective
February 28, 2010, we are required to reflect the total grant date fair values of the option grants
in the year of grant, rather than the portion of this amount that was recognized for financial
statement reporting purposes in a given fiscal year which was required under the prior SEC rules,
possibly resulting in a change to the amounts reported in prior Annual Reports.

EMPLOYMENT AGREEMENTS

The Company has no individual employment agreements with any of its executive officers or
employees.

Future Compensation of Executive Officers

The board of directors approves salaries for the Company's executive officers as well as the
Company's overall salary structure.  For year one following the closing of financing sufficient to
commence flight operations, the rate of compensation for the Company's executive officers is
expected to be:(i) President $198,000, Executive Vice President	 $130,000, Vice President
Finance $120,000, (ii) Vice President Marketing $110,000,and (iii) Vice President Europe
$90,000.  Board directors are not presently compensated and shall receive no compensation prior
to commencement of revenue service.

##### Item 12.  Security Ownership of Certain Beneficial Owners and

           Management and Related Stockholder Matters.

As of April 10, 2012, there were 1,909,529 shares of common stock, par value $0.0001
outstanding. The following table sets forth, as of December 31, 2010, the ownership of the
Company's Common Stock by (i)each director and officers of the Company, (ii) all executive
officers and directors of the Company as a group, and (iii) all other persons known to the
Company to own more than 5% of the Company's Common Stock.  Each person named in the
table has or shares voting and investment power with respect to all shares shown as beneficially
owned by such person.

|Directors and Officers                                                  | Common Shares

                  Beneficially Owned | Percent of Total Outstanding
|----------------------------------------------------------------------- | --------------------------------------------------- | ----------------------------
|Igor Dmitrowsky
 63-26 Saunders St., 
Suite 7I Rego Park, NY 11374      | 621,662,766                                         | 36.18                       
|Russell Thal  26 Ridge Drive Port 
Washington, NY 11050                 | 20,254,600                                          | 1.18                        
|Barry Clare  4319 215th St. 
Bayside, NY 11361                          | 73,499,998                                          | 4.3                         
|Vick Luis Bolanos  633 Monroe St.
 Riverside, NJ 08075                  | 100,466,667                                         | 5.58                        
|Walter Kaplinsky 
2000 Quentin Rd.
 Brooklyn, NY 11229                  | 11,500,000                                          | 0.67                        
|Andris Rukmanis Kundzinsala, 
8 Linija 9. Riga, Latvia LV-1005          | 5,468,750                                           | 0.32                        
|Shares of all directors and 
executive officers as a
 group (5 persons) | 832,852,781                                         | 48.48                       

##### Item 13.  Certain Relationships and Related Transactions.

Mr. Vick Luis Bolanos was elected to the Baltia Board of Directors while he was, and remains,
President and Chairman of Eastern Construction & Electric, Inc.  The transaction between Baltia
and Eastern was made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for comparable loans with
persons not related to the lender; and did not involve more than the normal risk of collectibility
or present other unfavorable features. This transaction is discussed further in Note 6 to the
Financial Statements infra.

##### Item 14.  Principal Accountant Fees and Services.

In 2011, 2010, 2009 and 2008 the Company paid its independent accountant $7,000 for services
in providing an audit of the previous year. All other Company accounting and tax preparations
have been done in house.

#### PART IV.

##### Item 15.  Exhibits and Financial Statements.

**APPENDIX A - Financial States for the Years Ended December 31, 2011 ad 2010**

|Report of Independent Registered Accounting firm                                                                                         | F-1        
|---------------------------------------------------------------------------------------------------------------------------------------- | -----------
|Balance Sheets as of December 31, 2011 and 2010                                                                                          | F-2        
|Statements of Operations for the years ended December 31, 2011 and 2010, and the period August 29, 1989 (inception) to December 31, 2011 | F-3        
|Statements of Cash Flows for the years ended December 31, 2011 and 2010, and the period August 9, 1989 (inception) to December 31, 2011  | F-4        
|Statement of Changes of Stockholders' Equity for the years ended December 31, 2011, 2010, 2009, and 2008                                 | F-5        
|Notes to Financial Statements                                                                                                            | F-6 to F-26

#### **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
Years Ended December 31, 2011 and 2010

Board of Directors and Shareholders
Baltia Air Lines, Inc.
New York, NY

I have audited the accompanying balance sheets of Baltia Air Lines, Inc. ("the Company") as of December 31, 2011 and 2010 and the statements of operations, stockholders' equity, and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements.  I was not engaged to perform an audit of its internal control over financial reporting.  My audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.  Accordingly, I express no such opinion.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  I believe that my audits provide a reasonable basis for my opinion.
In my opinion, these financial statements present fairly, in all material respects, the financial position of Baltia Air Lines, Inc. as of December 31, 2011 and 2010 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 8 of the financial statements, the Company has incurred a deficit during its development stage of approximately $75 million and consumed approximately $21 million of cash due to its operating activities.  The Company may not have adequate readily available resources to fund operations through December 31, 2012. This raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Patrick Rodgers, CPA, PA
Patrick Rodgers, CPA, PA
Altamonte Springs, Florida
April 16, 2012

PAGE F-1

---

#### APPENDIX A – Financial
Exhibits

Baltia
Air Lines, Inc.

Balance Sheet

(A Development Stage Company)

## 

|                                                             | December   31, 2011 | December   31, 2010
|------------------------------------------------------------ | ------------------- | -------------------
|                                                             |                     |                    
|Assets                                                       |                     |                    
|                                                             |                     |                    
|Current Assets                                               |                     |                    
|Cash                                                         | $57,390             | $52,840            
|Prepaid expenses                                             | -                   | 50,160             
|Total current assets                                         | 57,390              | 103,000            
|                                                             |                     |                    
|Property & Equipment:                                        |                     |                    
|Equipment                                                    | 3,513,526           | 3,011,308          
|Accumulated depreciation                                     | (109,268)           | (92,782)           
|Net property & equipment                                     | 3,404,258           | 2,918,526          
|                                                             |                     |                    
|Other Assets:                                                |                     |                    
|Security deposit and other                                   | 317,293             | 240,000            
|                                                             |                     |                    
|Total Assets                                                 | $3,778,941          | $3,261,526         
|                                                             |                     |                    
|                                                             |                     |                    
|Liabilities
  & Equity                                       |                     |                    
|                                                             |                     |                    
|Current Liabilities:                                         |                     |                    
|Accounts payable                                             | $205,285            | $100,000           
|Accrued expenses                                             | 112,125             | 8,625              
|Total current liabilities                                    | 317,410             | 108,625            
|                                                             |                     |                    
|Long-term debt, net of discount                              | 1,003,941           | 865,948            
|                                                             |                     |                    
|Stockholders’ Equity:                                        |                     |                    
|Preferred stock-2,000,000 authorized $0.01
  par value       |                     |                    
|66,500 issued & outstanding                                  | 665                 | 665                
|Common stock-1,500,000,000 authorized
  $0.0001 par value    |                     |                    
|1,718,031,382 issued & outstanding
  (1,118,814,994 in 2011) | 171,803             | 111,881            
|Additional paid in capital                                   | 76,933,560          | 51,747,347         
|Deficit accumulated during development
  stage               | (74,648,438)        | (49,572,940)       
|Total stockholders’ equity                                   | 2,457,590           | 2,286,953          
|                                                             |                     |                    
|Total Liabilities and
  stockholders’ equity                 | $3,778,941          | $3,261,526         



See
Summary of Significant Accounting Policies and 
Notes to Financial Statements

PAGE F-2

---



Baltia Air Lines, Inc.
Statement of Operations 
(A Development Stage Company)



|                                               | Years
  Ended December 31, |                          | 8/29/89(Inception)
  to
|---------------------------------------------- | -------------------------- | ------------------------ | -----------------------
|                                               | 2011                       | 2010                     |                        
|                                               |                            |                          |                        
|Revenue                                        | $                 
  -     | $                   
  - |                        
|                                               |                            |                          |                        
|Costs & Expenses:                              |                            |                          |                        
|General & administrative                       | 24,323,228                 | 18,560,838               |                        
|FAA certification costs                        | 490,851                    | 804,418                  |                        
|Training                                       | -                          | -                        |                        
|Depreciation                                   | 16,486                     | 6,924                    |                        
|Other                                          | -                          | -                        |                        
|Interest expense (income)                      | 241,493                    | 19,504                   |                        
|Total Costs & Expenses                         | 25,072,058                 | 19,391,684               |                        
|                                               |                            |                          |                        
|Loss before income taxes                       | (25,072,058)               | (19,391,684)             |                        
|Income taxes                                   | 3,439                      | 2,843                    |                        
|                                               |                            |                          |                        
|Deficit Accumulated During Development
  Stage | ($25,075,497)              | ($19,394,527)            |                        
|                                               |                            |                          |                        
|                                               |                            |                          |                        
|Per share amounts:                             |                            |                          |                        
|Basic:                                         |                            |                          |                        
|Loss                                           | ($0.02)                    | ($0.02)                  |                        
|Weighted Average Shares Outstanding            | 1,416,885,867              | 913,981,784              |                        
|                                               |                            |                          |                        



See Summary of Significant Accounting
Policies and Notes to Financial Statements

PAGE F-3

---

Baltia Air Lines, Inc.
Statement of Cash Flows
(A Development Stage Company)





|                                                          | Years
  Ended December 31, | 8/29/89(Inception)
  to
|--------------------------------------------------------- | -------------------------- | -----------------------
|Statement of Cash Flows                                   | 2011                       | 2010                   
|                                                          |                            |                        
|Cash flows from operating activities:                     |                            |                        
|Deficit Accumulated During Development
  Stage            | ($25,075,497)              | ($19,394,527)          
|Adjustments required to reconcile deficit
  accumulated   |                            |                        
|development stage to cash used in operating
  activities: |                            |                        
|Depreciation                                              | 16,486                     | 6,924                  
|Amortization of loan discount                             | 137,993                    | 10,925                 
|Expenses paid by issuance of common stock
  and options   | 17,438,892                 | 15,009,850             
|(Increase) decrease in prepaid expenses                   | 50,160                     | (50,160)               
|Increase in accounts payable & accrued
  expenses         | 208,785                    | 8,624                  
|Cash flows used by operating activities:                  | (7,223,181)                | (4,408,364)            
|                                                          |                            |                        
|Cash flows from investing activities:                     |                            |                        
|Purchase of equipment                                     | (502,217)                  | (2,266,147)            
|Security deposits                                         | (77,293)                   | (240,000)              
|Cash used in investing activities                         | (579,510)                  | (2,506,147)            
|                                                          |                            |                        
|Cash flows from financing activities:                     |                            |                        
|Proceeds from issuance of common stock                    | 7,807,242                  | 4,377,454              
|Proceeds from issuance of preferred stock                 | -                          | -                      
|Loans from related parties                                | -                          | -                      
|Repayment of related party loans                          | -                          | -                      
|Proceeds of long-term debt                                | -                          | 1,150,000              
|Acquisition of treasury stock                             | -                          | -                      
|Cash generated by financing activities                    | 7,807,242                  | 5,527,454              
|                                                          |                            |                        
|Change in cash                                            | 4,550                      | (1,387,057)            
|Cash-beginning of period                                  | 52,840                     | 1,439,897              
|Cash-end of period                                        | $
  57,390                 | $
  52,840             

See Summary of Significant Accounting Policies and 
Notes to Financial Statements

PAGE F-4

---





Baltia Air Lines, Inc.
Statement of Stockholders' Equity
(A Development Stage Company)



|                                                 |           |             |        |               |                       |                              |  |                                       
|------------------------------------------------ | --------- | ----------- | ------ | ------------- | --------------------- | ---------------------------- |  | --------------------------------------
|                                                 | Preferred |             | Common |               | Deficit              
|                                                 | Shares    | Par
  Value |        | Shares        | Common
  Stock Amount | Additional
  Paid-In Capital |  | Accumulated
  During Development Stage
|Balance at December 31, 2007                     | 66,500    | $665        |        | 279,450,534   | 27,945                | 16,233,527                   |  | (14,254,326)                          
|Exercise of Warrants and Options                 |           |             |        | 46,000,000    | 4,600                 | -                            |  |                                       
|Stock issued and issuable for cash               |           |             |        | 816,625       | 82                    | 46,368                       |  |                                       
|Stock issued for services @$.02/share            |           |             |        | 29,500,000    | 2,950                 | 673,000                      |  |                                       
|Options issued for services                      |           |             |        | -             | -                     | 1,764,099                    |  |                                       
|Net Loss                                         |           |             |        |               |                       |                              |  | (3,748,537)                           
|Balance at December 31, 2008                     | 66,500    | 665         |        | 355,767,159   | 35,577                | 18,716,994                   |  | (18,002,863)                          
|Exercise of Warrants and Options                 |           |             |        | 32,000,000    | 3,200                 | -                            |  |                                       
|Stock issued and issuable for cash               |           |             |        | 154,034,244   | 15,403                | 3,686,497                    |  |                                       
|Stock issued for services @$.047/share           |           |             |        | 200,778,636   | 20,078                | 9,430,413                    |  |                                       
|Fair Value of options issued for services        |           |             |        | -             | -                     | 243,787                      |  |                                       
|Stock issued to purchase airplane                |           |             |        | 1,000,000     | 100                   | 24,900                       |  |                                       
|Net Loss                                         |           |             |        |               |                       |                              |  | (12,175,550)                          
|Balance at December 31, 2009                     | 66,500    | 665         |        | 743,580,039   | 74,358                | 32,102,591                   |  | (30,178,413)                          
|Exercise of Warrants and Options                 |           |             |        | -             | -                     | -                            |  |                                       
|Stock issued and issuable for cash               |           |             |        | 115,776,464   | 11,578                | 4,365,876                    |  |                                       
|Stock issued for services @$.059/share           |           |             |        | 252,658,491   | 25,266                | 14,984,584                   |  |                                       
|Fair Value of options issued as loan
  incentive |           |             |        | -             | -                     | 92,745                       |  |                                       
|Stock issued as loan incentive                   |           |             |        | 6,800,000     | 680                   | 201,552                      |  |                                       
|Net Loss                                         |           |             |        |               |                       |                              |  | (19,394,527)                          
|Balance at December 31, 2010                     | 66,500    | 665         |        | 1,118,814,994 | 111,881               | 51,747,348                   |  | (49,572,940)                          
|Stock issued and issuable for cash               |           |             |        | 241,369,947   | 24,137                | 7,783,105                    |  |                                       
|Stock issued for services @$.049/share           |           |             |        | 357,846,441   | 35,786                | 17,403,106                   |  |                                       
|Net Loss                                         |           |             |        |               |                       |                              |  | (25,075,498)                          
|Balance at December 31, 2011                     | 66,500    | $665        |        | 1,718,031,382 | $171,804              | $76,933,559                  |  | ($74,648,438)                         



See Summary of Significant Accounting
Policies and 
Notes to Financial Statements





PAGE F-5

---

BALTIA AIR LINES, INC.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DECEMBER 31, 2011  Basis of Presentation:
  The
financial statements have been presented in a “development stage”
format. Since inception, our primary activities have been raising of capital,
obtaining financing and of obtaining route authority and approval from the DOT
and the FAA. We have not commenced our principal revenue producing activities. Use of Estimates:
The preparation of financial statements in conformity
with generally accepted accounting principles requires our management to make
estimates and assumptions that affect reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statement and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the estimates. Cash and Cash Equivalents:
For financial statement presentation purposes, we
consider those short-term, highly liquid investments with original maturities
of three months or less to be cash or cash equivalents. Fair Value of Financial Instruments:FASB ASC 825, “Financial
Instruments,” requires entities to disclose the fair value of
financial instruments, both assets and liabilities recognized and not
recognized on the balance sheet, for which it is practicable to estimate fair
value. FASB ASC 825 defines fair value of a financial instrument as the amount
at which the instrument could be exchanged in a current transaction between
willing parties. At December 31, 2011 and 2010, the carrying value of certain
financial instruments (cash and cash equivalents, accounts payable and accrued
expenses.) approximates fair value due to the short-term nature of the
instruments or interest rates, which are comparable with current rates. Fair Value Measurements:
FASB ASC 820 defines fair value and establishes a
framework for measuring fair value and establishes a fair value hierarchy which
prioritizes the inputs to the inputs to the valuation techniques. Fair value is
the price that would be received to sell an asset or amount paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. A fair value measurement assumes that the transaction to sell
the asset or transfer the liability occurs in the principal market for the
asset or liability or, in the absence of a principal market, the most
advantageous market. Valuation techniques that are consistent with the market,
income or cost approach, as specified by FASB ASC 820, are used to measure fair
value. Fair Value Hierarchy FASB ASC 820 specifies a hierarchy of
valuation techniques based upon whether the inputs to those valuation
techniques reflect assumptions other market participants would use based upon
market data obtained from independent sources (observable inputs), or reflect
the Company’s own assumptions of market participant valuation
(unobservable inputs). In accordance with FASB ASC 820, these two types of
inputs have created the following fair value hierarchy: 
  Level 1 – Quoted prices in active
  markets that are unadjusted and accessible at the measurement date for
  identical, unrestricted assets or liabilities.
  Level 2 – Quoted prices for identical
  assets and liabilities in markets that are not active, quoted prices for
  similar assets and liabilities in active markets or financial instruments for
  which significant inputs are observable, either directly or indirectly.Level 3 – Prices or valuations that
  require inputs that are both significant to the fair value measurement and
  unobservable. FASB ASC 820 requires the use of
observable market data if such data is available without undue cost and effort. Measurement of Fair Value The Company measures fair value as an exit
price using the procedures described below for all assets and liabilities
measured at fair value. When available, the Company uses unadjusted quoted
market prices to measure fair value and classifies such items within Level 1.
If quoted market prices are not available, fair value is based upon internally
developed models that use, where possible, current market-based or
independently-sourced market parameters such as interest rates and currency
rates. Items valued using internally generated models are classified according
to the lowest level input or value driver that is significant to the valuation.
Thus, an item may be classified in Level 3 even though there may be inputs that
are readily observable. If quoted market prices are not available, the
valuation model used generally depends on the specific asset or liability being
valued. The determination of fair value considers various factors including
interest rate yield curves and time value underlying the financial instruments. Property and Equipment:
>Property and equipment are recorded at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, generally 5-15 years. Expenditures for renewals and
betterments are capitalized. Expenditures for minor items, repairs and
maintenance are charged to operations as incurred. Gain or loss upon sale or
retirement due to obsolescence is reflected in the operating results in the
period the event takes place. Valuation
of Long-Lived Assets: We review
the recoverability of our long-lived assets, including buildings, equipment and
intangible assets, when events or changes in circumstances occur that indicate
that the carrying value of the asset may not be recoverable. The assessment of
possible impairment is based on our ability to recover the carrying value of
the asset from the expected future pre-tax cash flows (undiscounted and without
interest charges) of the related operations. If these cash flows are less than
the carrying value of such asset, an impairment loss is recognized for the
difference between estimated fair value and carrying value. Our primary measure
of fair value is based on discounted cash flows. The measurement of impairment
requires management to make estimates of these cash flows related to long-lived
assets, as well as other fair value determinations. We amortize the costs of other intangibles
(excluding goodwill) over their estimated useful lives unless such lives are
deemed indefinite. Amortizable intangible assets are tested for impairment
based on undiscounted cash flows and, if impaired, written down to fair value
based on either discounted cash flows or appraised values. Intangible assets
with indefinite lives are tested for impairment, at least annually, and written
down to fair value as required. Comprehensive Income:
 Comprehensive income is defined as changes in the
equity of an enterprise except those resulting from shareholder transactions.
The amounts shown on our statement of stockholders’ equity relate to the
cumulative effect of minimum pension liabilities, translation adjustments, and
unrealized gain or loss on securities. Stock-Based Compensation Plans:
 Stock-based awards are accounted for using the fair
value method in accordance with ASC 718, Share-Based Payments, and EITF
Issue No. 96-18, Accounting for Equity Instruments that are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling Goods or Services.
Our primary type of share-based compensation consists of stock options. We use
the Black-Scholes option pricing model in valuing options. The inputs for the
valuation analysis of the options include the market value of the Company’s
common stock, the estimated volatility of the Company’s common stock, the
exercise price of the warrants and the risk free interest rate. Year
  Interest
  Rate
  Dividend
  Yield
  Expected
  Volatility
  Expected
  Life in Years2010
  4.4%
  0.00%
  200%
  12011
  3.0%
  0.00%
  200%
  5 Accounting For Obligations And
Instruments Potentially To Be Settled In The Company’s Own Stock. We account for obligations and instruments potentially to be settled in
the Company’s stock in accordance with EITF Issue No. 00-19, Accounting
for Derivative Financial Instruments Indexed To, and Potentially Settled In a
Company’s Own Stock. This issue addresses the initial balance sheet
classification and measurement of contracts that are indexed to, and
potentially settled in, the Company’s own stock.> Under EITF Issue No. 00-19 contracts are
initially classified as equity or as either assets or liabilities, in the
following situations: Equity ·
Contracts that require physical settlement or net-share settlement; and · Contracts
that give the company a choice of net-cash settlement or settlement in its own
shares (physical settlement or net-share settlement), assuming that all the
criteria for equity classification have been met. Assets or Liabilities ·
Contracts that require net-cash settlement (including a requirement to net-cash
settle the contract if an event occurs and if that event is outside the control
of the company); and · Contracts
that give the counterparty a choice of net-cash settlement or settlement in
shares (physical settlement or net-share settlement). All contracts are initially measured at
fair value and subsequently accounted for based on the current classification.
Contracts initially classified as equity do not recognize subsequent changes in
fair value as long as the contracts continue to be classified as equity. For
contracts classified as assets or liabilities, the Company reports changes in
fair value in earnings and discloses these changes in the financial statements
as long as the contracts remain classified as assets or liabilities. If
contracts classified as assets or liabilities are ultimately settled in shares,
any previously reported gains or losses on those contracts continue to be
included in earnings. The classification of a contract is reassessed at each
balance sheet date. In accordance with EITF Issue No. 00-19, a
transaction which includes a potential for net-cash settlement, including
liquidated damages, requires that derivative financial instruments, including
warrants and additional investment rights, initially be recorded at fair value
as an asset or liability and subsequent changes in fair value be reflected in
the statement of operations. The recorded value of the liability for such
derivatives can fluctuate significantly based on fluctuations in the market
value of the underlying common stock of the issuer of the derivative
instruments, as well as in the volatility of the stock price during the term
used for observation and the remaining term. Earnings per Common Share:
Basic earnings per share is computed by dividing
income available to common shareholders (the numerator) by the weighted-average
number of common shares outstanding (the denominator) for the period. Diluted
earnings per share assume that any dilutive convertible securities outstanding
were converted, with related preferred stock dividend requirements and
outstanding common shares adjusted accordingly. It also assumes that
outstanding common shares were increased by shares issuable upon exercise of
those stock options for which market price exceeds the exercise price, less
shares which could have been purchased by us with the related proceeds. In
periods of losses, diluted loss per share is computed on the same basis as
basic loss per share as the inclusion of any other potential shares outstanding
would be anti-dilutive. Income Taxes:
 We have adopted ASC 740, Accounting for Income
Taxes. Pursuant to ASC 740, we are required to compute tax asset benefits
for net operating losses carried forward. The potential benefits of net
operating losses have not been recognized in these financial statements because
the Company cannot be assured it is more likely than not it will utilize the
net operating losses carried forward in future years. We must make certain estimates and judgments
in determining income tax expense for financial statement purposes. These
estimates and judgments occur in the calculation of certain tax assets and
liabilities, which arise from differences in the timing of recognition of
revenue and expense for tax and financial statement purposes. Deferred tax assets and liabilities are
determined based on the differences between financial reporting and the tax
basis of assets and liabilities using the tax rates and laws in effect when the
differences are expected to reverse. ASC 740 provides for the recognition of
deferred tax assets if realization of such assets is more likely than not to
occur. Realization of our net deferred tax assets is dependent upon our
generating sufficient taxable income in future years in appropriate tax
jurisdictions to realize benefit from the reversal of temporary differences and
from net operating loss, or NOL, carryforwards. We have determined it more
likely than not that these timing differences will not materialize and have provided
a valuation allowance against substantially all of our net deferred tax asset.
Management will continue to evaluate the realizability of the deferred tax
asset and its related valuation allowance. If our assessment of the deferred
tax assets or the corresponding valuation allowance were to change, we would
record the related adjustment to income during the period in which we make the
determination. Our tax rate may also vary based on our results and the mix of
income or loss in domestic and foreign tax jurisdictions in which we operate. In addition, the calculation of our tax
liabilities involves dealing with uncertainties in the application of complex
tax regulations. We recognize liabilities for anticipated tax audit issues in
the U.S. and other tax jurisdictions based on our estimate of whether, and to
the extent to which, additional taxes will be due. If we ultimately determine
that payment of these amounts is unnecessary, we will reverse the liability and
recognize a tax benefit during the period in which we determine that the
liability is no longer necessary. We will record an additional charge in our
provision for taxes in the period in which we determine that the recorded tax
liability is less than we expect the ultimate assessment to be. ASC 740 which requires recognition of
estimated income taxes payable or refundable on income tax returns for the
current year and for the estimated future tax effect attributable to temporary
differences and carry-forwards. Measurement of deferred income tax is based on
enacted tax laws including tax rates, with the measurement of deferred income
tax assets being reduced by available tax benefits not expected to be realized Uncertain Tax Positions The Financial Accounting Standards Board
issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes
– an interpretation of FASB Statement No. 109, Accounting for Income
Taxes” (“FIN No. 48”) which was effective for the Company on
January 1, 2007. FIN No. 48 addresses the determination of whether tax benefits
claimed or expected to be claimed on a tax return should be recorded in the
financial statements. Under FIN No. 48, the Company may recognize the tax
benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities
based on the technical merits of the position. The tax benefits recognized in
the financial statements from such position should be measured based on the
largest benefit that has a greater than fifty percent likelihood of being
realized upon ultimate settlement. FIN No. 48 also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods and disclosure requirements. Our federal and state income tax returns are
open for fiscal years ending on or after December 31, 2006. We are not under
examination by any jurisdiction for any tax year. At December 31, 2011 we had
no material unrecognized tax benefits and no adjustments to liabilities or
operations were required under FIN 48. Recent Accounting Pronouncements: Recently
Adopted Standards In May 2011, the FASB issued ASC update No.
2011-04, Fair Value Measurement (Topic 820), Amendments to Achieve Common
Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.
The amendments in this update result in common fair value measurement and
disclosure requirements in US generally accepted accounting principles
("U.S. GAAP") and International Financial Reporting Standards
("IFRS"). Consequently, the amendments converge the fair value
measurement guidance in U.S. GAAP and IFRS. Some of the amendments clarify the
application of existing fair value measurement requirements, while other
amendments change a particular principle in ASC 820. The amendments in this
update that change a particular principle or requirement for measuring fair
value or disclosing information about fair value measurements include the
following: 1) measuring the fair value of financial instruments that are
managed within a portfolio, 2) application of premiums and discounts in a fair
value measurement, and 3) additional disclosures about fair value measurements.
The amendments in this update are to be applied prospectively and are effective
during interim and annual periods beginning after December 15, 2011. We do not
believe that adoption of this update will have a material impact on our
financial statements. In June 2011, the FASB issued ASC update No.
2011-05, Comprehensive Income (Topic 220), Presentation of Comprehensive
Income. The FASB decided to eliminate the option to present components of
other comprehensive income as part of the statement of changes in
stockholders’ equity, among other amendments in this update. The
amendments require that all non-owner changes in stockholder’s equity be
presented in a single continuous statement of comprehensive income or in two
separate but consecutive statements. In both choices, the Company is required
to present each component of net income along with total net income, each
component of other comprehensive income along with a total for other
comprehensive income, and a total amount for comprehensive income. The
statement of other comprehensive income should immediately follow the statement
of net income and include the components of other comprehensive income and
total for other comprehensive income, along with a total for comprehensive
income. The entity is also required to present on the
face of the financial statements reclassification adjustments for items that
are reclassified from other comprehensive income to net income in the
statement(s) where the components of net income and the components of
comprehensive income are presented. The amendments in this update should be
applied retrospectively, and are effective for fiscal years, and interim
periods within those years, beginning after December 15, 2011.  BALTIA AIR LINES, INC.
NOTES TO FINANCIAL STATEMENTS DECEMBER
31, 2011 1. Organization and
Operations The Company was formed as a U.S. airline on
August 24, 1989 in the State of New York. Our objective is to provide scheduled
air transportation from the U.S. to Russia, the Baltic States and Ukraine. In
1991, the Department of Transportation (DOT) granted the Company routes to
provide non-stop passenger, cargo and mail service from JFK to St. Petersburg
and from JFK to Riga, with online service to Minsk, Kiev and Tbilisi as well as
back up service to Moscow. We have two registered trademarks "BALTIA"
and "VOYAGER CLASS," and five trademarks subject to registration. Our
activities to date have been devoted principally to raising capital, obtaining
route authority and approval from the DOT and the FAA, training crews, and
conducting market research to develop the Company's marketing strategy. We intend to operate as a Part 121 carrier, a heavy jet operator.   As such, following certification we will be required to maintain our air carrier standards as prescribed by DOT and FAA regulation and as specified in the FAA approved Company manuals.   As part of its regulatory compliance we will be required to submit periodic reports of our operations to the DOT. 2. Property and Equipment A summary of property & equipment is as
follows: Estimated
  Useful Life
  
  2011
  
  2010Airplanes (2)
  10-15
  years
  
  $3,257,085
  
  $2,851,347Office equipment and other
  5-7
  years
  
  256,441
  
  159,961Less accumulated depreciation
  
  
  
  (109,268)
  
  (92,782)Net
  
  
  
  3,404,258
  
  2,918,526Current depreciation expense
  
  
  
  $16,486
  
  $6,924  3. Stockholders' Equity Description
of Securities Common Stock:
 We have been authorized 2,000,000,000 shares of
Common Stock at $.0001 par value per share. As of December 31, 2011, a total of
1.718,031,382 shares of Common Stock were issued and outstanding and held by
over 500 shareholders. In addition, we have granted options and warrants to
issue up to approximately 133,800,000 more shares of our common stock. Holders
of Common Stock are entitled to receive dividends, when and if declared by the
board of directors, subject to prior rights of holders of any Preferred Stock
then outstanding and to share ratably in the net assets of the company upon
liquidation. Holders of Common Stock do not have preemptive or other rights to
subscribe for additional shares. The Certificate of Incorporation does not
provide for cumulative voting. Shares of Common Stock have equal voting,
dividend, liquidation and other rights, and have no preference, exchange or
appraisal rights. Preferred Stock:
 We are authorized to issue up to a maximum of 2
million shares (66,500 shares outstanding) of Preferred Stock. We can issue
these shares as our board of directors shall from time to time fix by
resolution. Our Preferred Stock is not entitled to share in any dividends
declared on the Common Stock and has no voting rights. Each share is
convertible in to 3 shares of Common. The liquidation preference is set by this
conversion formula and results in a pro rata claim on the Company’s
assets based upon the underlying common shares issuable (199,500) upon
conversion. Recent
Issuance of Unregistered Securities 2011: Stock Issued for Cash We issued 241,369,947 shares of our common
stock in exchange for receiving a total of $7,807,242 in cash net of offering
expenses of. The shares are registered and not subject to restrictions as to
transferability. Stock Issued for Services We issued 357,846,441 shares of our common
stock in exchange for services. The shares were valued at $17,438,892 or about
$0.049 per share which reflected the weighted average market value at the time
of issuance. 148,500,000 of the shares valued at approximately $7.2 million
were issued to Igor Dmitrowsky our president. 2010: Stock Issued for Cash We issued 115,776,464 shares of our common
stock in exchange for receiving a total of $4,377,454 in cash net of offering
expenses of. The shares are registered and not subject to restrictions as to
transferability. Stock Issued for Services We issued 252,658,491 shares of our common
stock in exchange for services. The shares were valued at $15,009,850 or about
$0.059 per share which reflected the weighted average market value at the time
of issuance. 149,000,000 of the shares valued at approximately $8.8 million
were issued to Igor Dmitrowsky our president. We also issued 6.8 million shares
valued at $202,000 as a debt incentive. Summary of Option Activity The following table provides summary information on options issued by our company in unapproved equity compensation plans; the warrants exercised to date; the warrants that are presently exercisable and the current exercise prices of such warrants. All Plan & Non-Plan Compensatory Type OptionsWeighted
  average exercise price
  Weighted
  average remaining contractual term (years)
  Aggregate
  intrinsic value*SharesOptions outstanding at December 31, 2009
  28,979,318
  $0.02Granted
  3,400,000
  $0.10Exercised
  -
  NilLapsed
  -
  $0.00Options outstanding at December 31, 2010
  32,379,318
  $0.03
  2.7
  $1,727,949Granted
  
  
  -
  $0.00Exercised
  
  
  -
  $0.00Lapsed
  
  
  (26,822,500)
  $0.00Options outstanding at December 31, 2011
  5,556,818
  $0.07
  3.6
  $111,073Options exercisable at December 31, 2011
  5,556,818
  $0.07
  3.6
  $111,073* Amount by which the fair value of the
  stock at the balance sheet date exceeds the exercise price    The following table summarizes the status of the Company's aggregate
warrants as of December 31, 2011: Options
  Outstanding
  
  Options
  ExercisableRange
  of exercise prices
  Shares
  weighted
  average exercise price
  Weighted
  average remaining life in months
  Shares
  weighted
  average exercise price$
  0.01-$ 0.05
  3,276,818
  $0.01
  39.9
  3,276,818
  $0.01$
  0.06-$ .25
  2,280,000
  $0.17
  48.0
  2,280,000
  $0.17Total
  Shares
  5,556,818
  
  
  5,556,818   4. Income Taxes The Company has approximately $ 18.6 million
in available net operating loss carryovers available to reduce future income
taxes. These carryovers expire at various dates through the year 2032. The
Company has adopted ASC 740, Accounting for Income Taxes which provides
for the recognition of a deferred tax asset based upon the value the loss
carry-forwards will have to reduce future income taxes and management's
estimate of the probability of the realization of these tax benefits. We have
determined it more likely than not that these timing differences will not
materialize and have provided a valuation allowance against our entire net
deferred tax asset of approximately $6.1 million. Utilization of federal and state NOL and tax
credit carry-forwards may be subject to a substantial annual limitation due to
the ownership change limitations provided by the Internal Revenue Code of 1986,
as amended, and similar state provisions. The annual limitation may result in
the expiration of NOL and tax credit carry-forwards before full utilization. 5. Commitments and Contingencies Facilities: The Company leases office space for its
administrative offices, under three month to month agreements, at a combined
monthly rental of approximately $27,000. In 2011 and 2010 expense was $336,979
and $387,898 respectively. 6. Long-Term Debt-Related Party: On December 1, 2010, the Company entered into
a loan arrangement with a company owned or controlled by one of our directors
for a total amount of $1,150,000. The Company issued a note bearing interest at
9% per annum payable quarterly and a maturity date of March 31, 2013. The
Company will be obligated to repay the note prior to the maturity date upon
raising $4 million or from the proceeds of operating revenue. As a loan
inducement the Company issued 6.8 million shares of common stock and 3.4
million warrants. A placement fee of $50,000 was paid from the proceeds of this
loan. The note is secured by both aircraft up to a limit of $2.9 million. The Company recorded the relative fair value
of the shares and warrants of $294,297 as additional paid-in capital and
established a discount debt. The discount is being amortized over the life of
the note (27 months) at an effective rate of 14.98%. The note is carried net of
the discount. Future accretion of the carrying value of the note is expected as
follows:  Face amount of note
  $1,150,000Amortization of discount through 2012
  (146,059)Current carrying value
  $1,003,941   7. Supplementary Cash Flow
Disclosure: 2011
  
  2010Fair Value of equity instruments issued as
  loan incentives
  $ -0-
  
  $294,297 8. Going Concern The accompanying financial statements have been prepared assuming that the company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.  Currently, the Company has a minimum cash balance available for the payment of ongoing operating expenses, and its operations has not of yet produced any revenue, which would allow it to cover its operational costs and allow it to continue as a going concern.  Since inception, the Company has incurred a deficit during its development stage of approximately $75.0 million and consumed approximately $21.0 million. The continued operations of the Company is dependent upon implementing airline service that would generate profits and raising sufficient capital through placement of its common stock or issuance of debt securities, which would enable the Company to carry out its business plan. In the event we do not generate sufficient funds from revenues or financing through the issuance of our common stock or from debt financing, we may be unable to fully implement our business plan and pay our obligations as they become due, any of which circumstances would have a material adverse effect on our business prospects, financial condition, and results of operations. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities. During 2011 and into 2012, we continue to finance our operations through the issuance of our common stock and the continued exercise of warrants. Until revenue operations begin, our monthly expenditures for administrative and regulatory compliance can be controlled at about $180,000-$200,000. In 2011, we raised $7.8 million a private placement in order to start revenue flight operations.  Revenue services did not start in 2011 as planned, and, as of April 15, 2012, we still have not implemented revenue producing services.  At the time flight service is inaugurated, the company plans to have approximately 15 management and 45 staff personnel. Management has considered the overall pipeline effect that enhances the initial cash position of a startup carrier. It is the industry practice for passengers to purchase tickets in advance of their flights while service vendors bill the carrier later. In order that a new airline would not fly empty on day one, approximately 30 days prior to the expected inaugural date the DOT authorizes sales of tickets and cargo. Such funds from advance sales, estimated at approximately $3 million for the company, accumulate in an escrow account, and are released upon the issuance of the air carrier certificate. There can be no assurance that additional financing will be available on terms favorable to us or at all.  If adequate funds are not available or are not available on acceptable terms, we may not be able to fund expansion. [END OF NOTES TO FINANCIAL STATEMENTS]
  OTHER EXHIBITS 3.1 Certificate of Incorporation of Baltia Air Lines, Inc.  (as amended October 21, 2010 and filed
November 2, 2011) Incorporated by reference to Exhibit 3.1 to
Baltia Air Lines Inc.'s reported on Form 10-K, 21 Dec 2011 from the year ended December 31,
2010. 3.2.1 Bylaws of Baltia Air Lines, Inc.  (amended in 2010 and ratified May 18, 2011) Incorporated by reference to Exhibit 3.2.1 to
Baltia Air Lines Inc.'s reported on Form 10-K, 21 Dec 2011 from the year ended December 31,
2010. 3.2.2 Bylaws of Baltia Air Lines, Inc.  (amended and ratified November 7, 2011) Incorporated by reference to Exhibit 3.2.2 to
Baltia Air Lines Inc.'s reported on Form 10-K, 21 Dec 2011 from the year ended December 31,
2010. 10. MATERIAL CONTRACTS 10.1 Aircraft Purchase Agreement of November 24, 2010 between Baltia Air Lines, Inc. And
Kalitta Air, LLC with confidential portion omitted and filed separately with the Commission
pursuant to a request for confidential treatment. Incorporated by reference to Exhibit 10.1 to
Baltia Air Lines Inc.'s report on Form 10-K, 2 Mar 2012 from the year ended December 31,
2010. 10.2.1 Lease Agreement between the Joint Stock Company, Pulkovo Airport, and Baltia Air
Lines, Inc. of February 11, 2010 with confidential portion omitted and filed separately with the
Commission pursuant to a request for confidential treatment. Incorporated by reference to
Exhibit 10.2. to Baltia Air Lines Inc's report on Form 10-K, 12 APR 2012 from the year ended
December 31, 2010. 10.3 Aircraft Purchase Agreement between Logistic Air, Inc. And Baltia Air Lines, Inc. Dated
August 12, 2009. with confidential portion omitted and filed separately with the Commission
pursuant to a request for confidential treatment. Incorporated by reference to Exhibit 10.3 to
Baltia Air Lines Inc.'s report on Form 10-K, 2 Mar 2012 from the year ended December 31,
2010. 10.4 Fuel supply Agreement between Joint Stock Company "SOVEX" and Baltia Air Lines, Inc.
Of February 2, 2010 with confidential portion omitted and filed separately with the Commission
pursuant to a request for confidential treatment. Incorporated by reference to Exhibit 10.4 to
Baltia Air Lines Inc.'s reported on Form 10-K, 21 Dec 2011 from the year ended December 31,
2010. 10.5 Letter evidencing agreement that engines identified in Item 10.6 below may be removed
from N705BL and installed on N706BL. Incorporated by reference to Exhibit 10.5 to Baltia Air
Lines Inc.'s reported on Form 10-K, 21 Dec 2011 from the year ended December 31, 2010. 10.6 Engine Lease Agreement between Logistic Air, Inc. and Baltia Air Lines, Inc. Dated January
15, 2010 with confidential portion omitted and filed separately with the Commission pursuant to
a request for confidential treatment. Incorporated by reference to Exhibit 10.6 to Baltia Air Lines
Inc.'s reported on Form 10-K, 12 Apr 2012 from the year ended December 31, 2010. 10.7 Product and Services Agreements between Navtech Systems Support Inc. and Baltia Air
Lines, Inc. dated January 15, 2010 with confidential portion omitted and filed separately with the
Commission pursuant to a request for confidential treatment. Incorporated by reference to
Exhibit 10.7 to Baltia Air Lines Inc.'s reported on Form 10-K, 21 Dec 2011 from the year ended
December 31, 2010. 10.8.1 Customs Clearance Agreement between ZAO Cargo Terminal Pulkovo and Baltia Air
Lines, Inc.dated June 1, 2010 with confidential portion omitted and filed separately with the
Commission pursuant to a request for confidential treatment.  Incorporated by reference to
Exhibit 10.8.1 to Baltia Air Lines Inc.'s reported on Form 10-K, 2 Mar 2012 from the year ended
December 31, 2010. 10.8.2 Customs Clearance Agreement between ZAO Cargo Terminal Pulkovo and Baltia Air
Lines, Inc.dated June 1, 2010 with confidential portion omitted and filed separately with the
Commission pursuant to a request for confidential treatment. Incorporated by reference to
Exhibit 10.8.2 to Baltia Air Lines Inc.'s reported on Form 10-K, 21 Dec 2011 from the year
ended December 31, 2010. 10.9.1 Ground Handling Agreement at Pulkovo Airport between ZAO Cargo Terminal Pulkovo
and Baltia Air Lines, Inc. dated January 2004 with confidential portion omitted and filed
separately with the Commission pursuant to a request for confidential treatment.  Incorporated by
reference to Exhibit 10.9.1 to Baltia Air Lines Inc.'s reported on Form 10-K, 2 Mar  2012 from
the year ended December 31, 2010. 10.9.2 Ground Handling Agreement at Pulkovo Airport between ZAO Cargo Terminal Pulkovo
and Baltia Air Lines, Inc. dated January 2004 with confidential portion omitted and filed
separately with the Commission pursuant to a request for confidential treatment. Incorporated by
reference to Exhibit 10.9.2 to Baltia Air Lines Inc.'s reported on Form 10-K, 2 Mar 2012 from
the year ended December 31, 2010. 10.10 First Amendment to Product and Services Agreements between Navtech Systems Support
Inc. and Baltia Air Lines, Inc. dated January 15, 2010 Incorporated by reference to Exhibit 10.10
to Baltia Air Lines Inc.'s reported on Form 10-K, 30 Mar 2012 from the year ended December
31, 2011. 10.11 Flight Training Services Agreement between Pan Am International Flight Academy and
Baltia Air Lines, Inc. dated April 19, 2011.  Incorporated by reference to Exhibit 10.11 to Baltia
Air Lines Inc.'s reported on Form 10-K, 30 Mar 2012 from the year ended December 31, 2011. 10.12 Access and System and Data Use Agreement between Sabre Inc., and Baltia Air Lines, Inc.
dated September 21, 2011. Incorporated by reference to Exhibit 10.12 to Baltia Air Lines Inc.'s
reported on Form 10-K, 30 Mar 2012 from the year ended December 31, 2010. 10.13.1 Insurance Hull and Liability Policy  UA00004495AV09A dated December 2009 through
December 2010.  Incorporated by reference to Exhibit 10.13.1 to Baltia Air Lines Inc.'s reported
on Form 10-K, 12 Apr 2012 from the year ended December 31, 2010. 10.13.2 Insurance Hull and Liability Policy  UA00004495A VI OA, dated December 2010
through December 2011. Incorporated by reference to Exhibit 10.13.2 to Baltia Air Lines Inc.'s
reported on Form 10-K, 2 Mar 2012 from the year ended December 31, 2010. 10.14 Ground and Passenger Handling at JFK International Airport Agreement between
Swissport North America, Inc. and Baltia Air Lines, Inc. with confidential portion omitted and
filed separately with the Commission pursuant to a request for confidential treatment.
Incorporated by reference to Exhibit 10.14 to Baltia Air Lines Inc.'s
reported on Form 10-K, 2 Mar 2012 from the year ended December 31, 2010. NOTE: Pursuant to 17 CFR 240.24b-2, confidential information has been omitted from certain of
the appended exhibits and has been filed separately with the Securities and Exchange
Commission pursuant to a Confidential Treatment Request filed with the Commission. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized. Baltia Air Lines, Inc. Date: April 16, 2011 /s/ Igor Dmitrowsky

By: Igor Dmitrowsky, President, CEO and CFO Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated. SIGNATURE                TITLE                      DATE/s/ Igor Dmitrowsky
Igor Dmitrowsky      (Principal Executive Officer 
and Principal Accounting          Officer)                Chairman, CEO and CFO                April 16, 2011/s/ Walter Kaplinsky
Walter Kaplinsky                Secretary and Director                April 16, 2011/s/ Andris Rukmanis

Andris Rukmanis                V.P. Europe and Director                April 16, 2011/s/ Vick Luis Bolanos
Vick Luis Bolanos                Director                April 16, 2011  Exhibit 31.1 BALTIA AIR LINES INC. CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Igor Dmitrowsky, certify that: 1. I have reviewed this annual report on Form 10-K of Baltia Air Lines,
Inc.; 2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report; 3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
controls over financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f))for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared; (b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles; (c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions): (a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting. Date: April 16, 2012 /s/ Igor Dmitrowsky    Chairman, CEO and CFO          April 16, 2012
Igor Dmitrowsky      (Principal Executive Officer) /s/ Igor Dmitrowsky    Chairman, CEO and CFO          April 16, 2012
Igor Dmitrowsky      (Principal Accounting
                           Officer)  EXHIBIT 32.1 BALTIA AIR LINES, INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report for Baltia Air Lines, Inc. (the
"Company") on Form 10-K for the period ended December 31, 2011 as filed
with the Securities and Exchange Commission on the date hereof (the
Report), I, Igor Dmitrowsky, certify, pursuant to 18 U.S.C. ss.1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Company. A signed original of this written statement required by Section 906 has
been provided to Baltia Air Lines, Inc. and will be retained by Baltia
Air Lines, Inc. and furnished to the Securities and Exchange Commission
or its staff upon request. Date: April 16, 2012 /s/ Igor Dmitrowsky    Chairman, CEO and CFO          April 16, 2012
Igor Dmitrowsky      (Principal Executive Officer) /s/ Igor Dmitrowsky    Chairman, CEO and CFO          April 16, 2012
Igor Dmitrowsky      (Principal Accounting
                           Officer)